Offtake agreements dominate biojet testimony before Senate

| August 10, 2011

The Senate Aviation Operations, Safety and Security Subcommittee recently listened to alternative aviation fuels experts on the current state of biobased jet fuel, and the testimony of the experts indicated, as relayed by Bill Glover, vice president of environmental strategy and aviation policy for Boeing Commercial Airplanes, “While the industry is rightfully pleased with its accomplishments thus far, much work needs to be done to make these alternative fuels commercially available and economically competitive.”

The subcommittee listened to two separate panels of speakers. Judy Canales, administrator for rural business and cooperative programs at USDA, reminded the subcommittee that in his State of the Union address in January, President Obama “reaffirmed the administration’s commitment to government investment in clean energy technology research, development and deployment.”

Canales also reminded the subcommittee on the immense opportunity for biojet producers providing fuel for U.S.-based users, explaining that the largest 35 U.S. airports account for roughly 80 percent of the jet fuel used by commercial aviation. “Thus, if aviation biofuel producers can deliver to these 35 airport ‘gas stations,’ they have access to virtually the entire 17 to 19 billion gallon per year commercial jet fuel market.” There are several government-related programs that have helped to expand the biojet production industry as well, Canales said, including the Biorefinery Assistance Program 9003, the Bioenergy Program for Advanced Biofuels 9005, the Biomass Crop Assistance Program 9011, the Crop Insurance Coverage for Energy Crops (12023) and the National Institute of Food and Agriculture.

But the testimony before the subcommittee was not limited to government-related individuals. John Plaza, CEO of Imperium Renewables, a biodiesel production facility located in Grays Harbor, Wash., provided insight into how the biojet industry could grow. Plaza has plans to build an advanced biofuel refinery adjacent to his facility in Grays Harbor that could supply significant amounts of biojet fuel by 2014, he explained. “This plan,” he said, “is contingent on obtaining long-term contractual commitments to purchase the fuel in order to justify the significant capital investment of over $250,000,000 required to build this new facility.” The Department of Defense, he added, is ideally situated to purchase these fuels, and Imperium has even gone so far to advise the Pentagon that the facility could supply up to 80 million gallons of the drop-in renewable jet fuel by 2014, with no technology risk.

Plaza also provided another factor that will help producers of renewable jet fuel justify their capital costs. “The best path forward for advanced biofuels such as renewable jet fuel would be to enable the Defense Department to enter into 15-year contracts for fuel supplies to meet the demands of its facilities in the Pacific Northwest and around the nation,” Plaza said.

Richard Altman, executive director for the Commercial Aviation Alternative Fuels Initiative, echoed the sentiments of Plaza on the importance of establishing preproduction offtake agreements. “Clearly, the center of the sustainable aviation alternative fuels resides with commercially viable offtake agreements between buyers and sellers at this point in time,” he said.

While the call for offtake agreements was brought up numerous times during the two panels, others reminded the subcommittee that, earlier in July, an ASTM committee approved an annex to the biojet specification, allowing airlines to use either Fischer Tropsch or hydroprocessed biojet immediately. Glover also outlined several items holding back the biojet industry, including infrastructure issues and, most importantly, feedstock supply.